statistic: Re: Fwd: Re: {Brainstormers -CA} 194 J , 194C an ANALYSIS

Rabu, 09 Januari 2008

Re: Fwd: Re: {Brainstormers -CA} 194 J , 194C an ANALYSIS

Dear Members,

I agree with the comments of ajay rajput, for deducting TDS on recruitment charges to consulting firm u/s 194C.

Regards
CA ANKUR SAHANI

----- Original Message ----
From: Deepak Gadgil <gadgildeepak2000@yahoo.com>
To: ICAI_CIRC_MEERUT_CA@yahoogroups.com
Sent: Friday, 4 January, 2008 6:01:16 PM
Subject: Re: Fwd: Re: {Brainstormers -CA} 194 J , 194C an ANALYSIS

Dear Friends

I welcome the debate on the subject & addition to my knowledge thereby.

I wd like to draw ur attention to explaation (b) appearing in sec 194(J) which explains what is technical service for the purpose of this section & takes us to explanation 2 to clause (vii) of subsection (1) of section 9 which says -

Explanation ⁷¹[2].—For the purposes of this clause, "fees for technical services" means any consideration (including any lump sum consideration) for the rendering of any managerial, technical or consultancy services (including the provision of services of technical or other personnel) but does not include consideration for any construction⁷², assembly, mining or like project undertaken by the recipient or consideration which would be income of the recipient chargeable under the head "Salaries".]

The original query from Ms Padmapriya refered to payments made to recruitment agents which in my opinion gets covered under the abovesaid explanation.

Further discussion on the subject is welcome / I also agree that these circulars r nt binding on the assessee & with rates of TDS under 194C & 194J being a lot different it affects the receipient heavily too.

CA Deepak Gadgil

Solapur, Maharashtra

ajay rajput <ca_ajayrajput@ yahoo.co. in> wrote:

I willl also like to add here that as per Circular No.715 dated 8-8-1995 payment to recruitment agencies are not in the nature of payments for work hence provisions of section 194J shall apply....but as u all aware that Circular are not binding upon assessee..

Hence i have compared the situation with one mentioned in Act nd Circular..

and relied upon what has been provided in section...

as section does not covers it as a professional or technical consultansy therefore how it may be classified covered under section 194J...

Note: forwarded message attached.

With Regards

CA AJAY RAJPUT

9891 91 6425

ca.ajayrajput@ gmail.com

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Date: Fri, 4 Jan 2008 04:30:39 +0000 (GMT)
From: ajay rajput <ca_ajayrajput@ yahoo.co. in>
Subject: Re: {Brainstormers -CA} 194 J , 194C an ANALYSIS
To: ICAI_CIRC_MEERUT_ CA@yahoogroups. com

Hi...to all Members of This Group..,

Manish and Garima..

It all depends upon the fact of the case as to whether Section 194C or 194J shall be applicable. One has to look into the terms of agreement/Contract entered into between parties, if the service rendered by the consultancy firm is in the nature of Professional services as referred by INCOME TAX ACT under Section 194J than only Sc.194J shall be applicable for this purpose we may analysis either of section..

The relevant provisions of Section 194J of income tax act are as follows..

Fees for professional or technical services.

194J. (1) Any person, not being an individual or a Hindu undivided family, who is responsible for paying to a resident any sum by way of—

             (a)   fees for professional services, or

             (b)   fees for technical services, ⁵⁶[or]

         [(c) royalty, or

              (d) any sum referred to in clause (va) of section 28,]

shall, at the time of credit of such sum to the account of the payee or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct an amount equal to [ten] per cent of such sum as income-tax on income comprised therein :

The next question arise as what constitue Fees for Professional Service ,,this aspect is covered by the explanation of this section itself....

as per explanation of section 194J:

"professional services" means services rendered by a person in the course of carrying on

legal,

medical,

engineering or architectural profession

or

the profession of accountancy

or

technical consultancy

or

interior decoration

or

advertising

or

such other profession as is notified by the Board for the purposes of section 44AA or of this section;

now one has to refer section 44AA for the complete analysis..

As per Section 44AA

Maintenance of accounts by professionals

Every person carrying on legal, medical, engineering or architectural profession or the profession of accountancy or technical consultancy or interior decoration or any other profession as is notified

(Notified professions : (a) The profession of authorised representative; and (b) the profession of film artist (actor, cameraman, director, music director, art director, dance director, editor, singer, lyricist, story writer, screen play writer, dialogue writer and dress designer)—Notification : No. SO 17(E), dated 12-1-1977/Profession of Company Secretary—Notification : No. SO 2675, dated 25-9-1992/Profession of Information Technology—Notification : No. SO 385(E), dated 4-5-2001.)

Hence form the above one can arrive that there is no services in the nature of Professional and its a -pure contracts which is well covered under section 194C in the terms 'any other contract'.

THEREFORE IN MY OPINION THIS IS A CASE WHERE SECTION 194C SHALL APPLY..

OTHER VIEWS ARE ALSO WELCOME...:

THANKS & Regards

CA Ajay Rajput

9891316425

manish gupta <guptamanishgupta198 2@yahoo.com> wrote:

HI

      194 C applicable in case of recruitment charges paid to conslutancy firm.

                                                                          ok

                                                                     CA.MANISH GUPTA

Garima Gandhi <garimagandhi22@ yahoo.co. in> wrote:

Hi

194J will be applicable since professional services are being rendered.

Thanks

Garima

Padmapriya V <priya_vpp@yahoo. co.in> wrote:

Dear Friends,

Will TDS u/s 194J be applicable in cases, where a firm/company pays "Recruitment charges" to a consultancy firm, which has procured candidates for the firm/company.

Or is 194C applicable?

Regards.

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With Regards

CA AJAY RAJPUT

9891 91 6425

ca.ajayrajput@ gmail.com

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